Microsoft loses EU ruling: Excerpts, links and video

In a significant legal blow to Microsoft, the European Court of First Instance this morning largely rejected the company’s appeal of the European Commission’s landmark March 2004 antitrust ruling.

ONLINE VIDEO

To watch video of Court President Bo Vesterdorf issuing this morning’s decision, go to this page, scroll down, and click on the 09:30 time stamp on the left-hand side.

The decision is important in part because it dealt with the company’s practice of bundling applications — in this case, Windows Media Player — with the dominant Windows operating system. The court also upheld the commission’s $600 million fine against the company, and the requirement that Microsoft license protocol information to its rivals in the computer server market. The decision did side with Microsoft on the commission’s use of a trustee to monitor the company’s activities.

“[T]he Court finds that the Commission clearly demonstrated in the contested decision that the fact that Microsoft offered OEMs only the version of Windows bundled with Windows Media Player had the inevitable consequence of affecting relations on the market between Microsoft, OEMs and suppliers of third-party media players by appreciably altering the balance of competition in favour of Microsoft and to the detriment of the other operators. The Court considers that that practice enabled Microsoft to obtain an unparalleled advantage with respect to distribution of its product and to ensure the ubiquity of Windows Media Player on client PCs throughout the world, thus providing a disincentive for users to use third-party media players and for OEMs to pre-install such media players on client PCs.”

That’s significant because it could affect future European Commission decisions involving Windows and other Microsoft products. Microsoft incorporates all sorts of applications into the operating system in that way — a practice that was at the center of its U.S. antitrust case, as well. However, the March 2004 decision in Europe only forced Microsoft to offer a version of Windows without Windows Media Player. It didn’t require the company to strip Windows Media Player from all Windows versions.

Brad Smith, Microsoft’s general counsel, made brief remarks to reporters in Europe after the decision, saying that it’s “clear that the court has agreed with the Commission on a number of the Commission’s points.”

He continued:

“We appreciate the court’s judgment on the trustee issue and the monitoring mechanism, an issue where the court agreed with us, and yet I would be the first to acknowledge that I don’t think anyone would say that is the most important part of this case or this decision. It’s clearly very important to us as a company that we comply with our obligations under European law. We’ll study this decision carefully, and if there are additional steps that we need to take in order to comply with it, we will take them.”

Here’s a link to the video of Smith’s remarks. Microsoft is holding a conference call with reporters later this morning, and one of the questions that will come up is whether it plans to appeal to the European Court of Justice. If it does, it has two months to file.

To watch video of Court President Bo Vesterdorf issuing this morning’s decision, go to this page, scroll down, and click on the 09:30 time stamp on the left-hand side. Microsoft Smith is visible at the beginning of the video, at the counsel’s table.

A news conference with Neelie Kroes, the European competition commissioner, can be accessed by scrolling farther down on the same page and clicking on the 12:17 time stamp.